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How Ponzi Schemes Are Destroying Lives In Nigeria

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Ponzi Scheme: A Threat To Lives In Nigeria
File photo to illustrate a distress man

 

Over the last decade, Nigeria have, increasingly been plagued by the rise of Ponzi schemes, which have lured thousands of unsuspecting investors with the promise of high returns on their investments.

 

Ponzi schemes are fraudulent investment schemes that promise high returns with little or no risk to investors.

 

These schemes have become a common occurrence for decades in Nigeria with many Nigerians victims to these fraudulent investment schemes.

 

The scheme pays returns to earlier investors using the capital of new investors rather than generating profits from legitimate investments.

 

According to Nigeria’s Securities and Exchange Commission, available data generated by the Norrenberger Financial Investment scheme last month, suggests that Nigerians have lost over N300bn to ponzi schemes over the last five years.

 

One of the most notorious Ponzi schemes in Nigeria, MMM, was launched in 2016 and promised investors returns of up to 30 percent per month. At its peak, MMM had over three million participants in Nigeria alone, with some estimates suggesting that the scheme had attracted as much as $50 million in investment.

 

Beyond the numbers, Biztellers looks at how this phenomenon have destroyed lives of families that have fallen victim over the years.

 

Many victims of Ponzi scheme have lost their lives due to depression, those who survived ,have become shadows of their former selves. Such is the case of two brothers, Ifeanyi Eze and Promise Eze who are yet to recover from their depressed condition after a failed investment worth millions of naira sometime in 2021.

 

According to the mother of the victims, she explained that both boys had invested five million naira, in a Ponzi scheme and the money was supposed to be for a business startup. They were assured of good returns but they were disappointed as the scheme crashed and nothing was learnt of it afterwards.

 

In her words: “I am in deep sorrow from what happened to my only two sons. I have tried everything medically and otherwise to address the problem but it has proved abortive. It started when they received the sum of five million naira from a relation to start a business but one afternoon, I saw them making some calculations with one of their friends. I didn’t know that these boys were planning their way to their current situation because after some months, we discovered that they had gambled with that money.

 

“After much interrogation and findings, we discovered that they had invested that money in a network and as soon as they invested the money, the platform crashed. I was very mad at them. When they got to know about the situation that the scheme had crashed and had no way to communicate with the company, my boys went into serious depression.

 

“They mostly stayed indoors. This happened for months until we began to notice that Ifeanyi would be speaking loudly to himself. We have tried several medications which didn’t help and this continued for a very long time until one day when he got so angry, stripped himself naked and ran away from the house. He was however brought back home with the help of friends.

 

“Promise on his part also talks to himself and does nothing although he has been trying to come out of the situation. We have spent a lot of money on drugs just to redeem these children but we have not been successful. The situation keeps getting tougher. When we went to the hospital and the boys were examined, the doctor explained that their current condition was as a result of depression following a failed investment which affected them.

 

Another case is that of one, Mrs Chineye Chibuzor, who had invested about 15 million naira into a Ponzi scheme that swindled scores of Nigerians in 2021. According to her, the scheme appeared different and promising at the time so she decided to invest 15 million into it.

 

She said, “I was honestly deceived by what I saw. The founder appeared to be a man of God who drew many of his workers to Christ.

 

“But, shockingly, just when I invested 15 million naira which was my second investment, everything went into thin air. Since that investment, my marital life has not remained the same because my husband who stays abroad warned me and asked me to use that money for business but I was deceived. It took a lot from my marriage because after the whole thing my husband changed his attitude towards me and ever since I have been trying to work things out”.

 

She, cautions Nigerians against quick money “and stay away from anything that seems too good to be true.”

 

A former student of the University of Port Harcourt, Ademola Mutiu, who also fell victim to the ponzi scheme said, “I actually invested money during the time that many Nigerians were swindled by a very popular ponzi scheme.

 

“Since that time I have not recovered till now. I have been damaged. I was trying to double my school fees, so I invested in it and the scheme crashed. I could not raise more money to pay for my school fees because my parents were very angry with me.

 

” I could not get the money early enough so the vice chancellor of my school asked those who couldn’t pay to leave and our admissions were withdrawn. Since then my parents asked me to go into tailoring and that is what I have been doing since then.”

 

Another youth, a writer, Femi Ayajo said, “My elder brother warned me about stuffs like that: The first one in 2019, I lost #2500 in NNU forum. I got people to join. I wanted the referral bonus and the daily login bonus. 20k was coming at the end of the month. I already planned how I’ll upgrade my wardrobe and buy better food. I was so confident it won’t crash. My brother laughed at me and said, “You’ll soon learn.” I no hear word.

 

“Sadly, on withdrawal week ooo, I requested for withdrawal, till today, I no see shi shi. What pained me the most was my friend that opened like 4 accounts. I opened 2 accounts. I read daily news tire . I still no hear word. December 2021, I invested 10k in one football stuff like that.

 

“This one looked sure like every other ponzi-scheme but omoooooooooo, na mumu I be. After I got paid by a customer, I took 10k out of what I had and forgot it there. This one didn’t pain me like the first one because I wasn’t doing the work.

 

“I did it because everyone was talking about it and I didn’t want to miss out of the opportunity. Close friends and even church members don use this one gbope. People have used it to start businesses. But las las, victim no go learn. I bear the pain in this one like the man that I am.”

 

Ayajo further advised Nigerians against ponzi scheme, he said: “There’s no cheat code to wealth. Go learn a high-income skill.”

 

A former corp member, Opeyemi Hamzat also said: “Well, it started when someone introduce me to one Ponzi website where I will be able to earn a certain amount daily by reading news and sharing it on my social media pages, logging in daily, and some other things( which I can’t recall), I paid an activation fee of 5000 which is a one-time payment and to also refer people as it is necessary for my withdrawal.

 

“From there on, I was told my earnings will be paid at the end of each month once u reach the monthly withdrawal target. At the end of the month, I couldn’t withdraw my earnings, that is when I know that I have been scammed.”

 

Biztellers also spoke with an “expert” investor in Ponzi scheme Etim Unyime, who is both beneficiary and victim of ponzi scheme, he said: “I’ve been scammed and that’s it. I can’t begin to recall the amount because it’s much. I’ve lost over $6k to ponzi. I’ve also made more than that after it happened.

 

” So it’s relative. I’ve actually made more than I’ve lost but the most I’ve lost at once is $6k. In others, I get back my capital investment before it gets busted. The key is not to be greedy.”

 

Despite the sad stories of most of it’s victims, ponzi schemes continue to thrive in Nigeria and many more such schemes continue to spring up with the sole intent of defrauding.

 

The success of MMM and other Ponzi schemes in Nigeria can be partly attributed to the country’s economic situation. Nigeria has been facing a number of economic challenges in recent years, including high unemployment, inflation, and a scarcity of foreign exchange.

 

These conditions have left many Nigerians struggling to make ends meet, with some turning to high-risk investments in the hope of making quick profits.

 

Another factor contributing to the success of Ponzi schemes in Nigeria is a lack of financial literacy. Many Nigerians are not well-educated about the risks and rewards of investing, and are easily swayed by promises of high returns.

 

The culture of greed that pervades the Nigerian society is another factor that has contributed to the success of Ponzi schemes.

 

In a country where wealth is highly prized and social status is often tied to one’s material possessions, the promise of quick profits can be alluring.

 

Some Nigerians are willing to take on significant risks in order to achieve financial success, even if it means participating in a scheme that is clearly fraudulent, diving into it with all their earnings.

 

Nigerian celebrities coming out to promote this fraudulent schemes, knowingly misleading their followers and encouraging them to invest in a scam that will inevitably collapse, causing significant financial harm to them, is also another factor contributing to the popularity of Ponzi schemes in the country.  From A-rated celebrities to B-rated celebrities, various Nigerian celebrities have been guilty of promoting these schemes over the years.

 

Despite the prevalence of Ponzi schemes in Nigeria, very few perpetrators of these fraudulent schemes have been prosecuted.

 

This is primarily due to a lack of effective regulatory frameworks and law enforcement agencies that are equipped to tackle financial fraud.

 

Many Ponzi scheme operators in Nigeria operate without any form of licensing or regulation, making it difficult for authorities to track their activities.

 

The lack of regulatory oversight allows these operators to continue their fraudulent activities with impunity, and they are often able to defraud thousands of unsuspecting investors before being caught or they go scot free.

 

Also, another reason Ponzi scheme operators in Nigeria have evaded prosecution is the slow pace of the legal system. Cases can drag on for years in Nigerian courts, and by the time a verdict is reached, the scheme operator may have disappeared or died.

 

A perfect example of this is Ovaiza. No one knows the outcome of her case up until now. Furthermore, the burden of proof in financial fraud cases can be challenging to meet, and evidence can be difficult to obtain.

 

However, the national assembly recently proposed jail terms for Ponzi scheme promoters.

 

The bill which is only awaiting presidential assent to become law was stated by the Senate President, Ahmad Lawan at the plenary, that the bill is expected to protect investors, adequately regulate the market, reduce systemic risks as well as provide for more stringent punishment for operators of Ponzi schemes.

 

While this is good news, without fixing the issue of lack of effective regulatory frameworks, a slow legal system, corruption within law enforcement agencies, it will still be difficult for financial fraudsters operating Ponzi schemes in Nigeria to be brought to justice.

Opinion/Feature

Downstream Deregulation: Between Obasanjo’s Half-measures And Tinubu’s Bold Leadership

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By Temitope Ajayi
A video of former President Olusegun Obasanjo’s interview with News Central Television has been trending on social media platforms for the past week. In the interview, the former President, in a veiled reference to the current administration, said Nigeria has a President who came into office without a plan. Yet, the same ‘planless’ president is implementing a bold economic reform programme that Obasanjo initiated and abandoned mid-way.
This intervention is essentially about a tale of two leaders and how they both handled fuel subsidy removal, a very touchy issue every president of Nigeria has avoided since 1973 because of its disruptive nature and potential to precipitate a pushback that may lead to civil unrest. This serious matter in itself can make a difference between a bold and courageous leader from one that is pretentious and hesitant.
It is a fact of history that one of the things former President Obasanjo set out to do, among other reforms his administration embarked upon, was complete deregulation of the downstream oil industry. But hard as he tried, he failed to actualise it. Obasanjo faced so much opposition from organised labour and civil society groups that he abandoned a good policy that would have led to massive economic gains for the country. All he could muster the courage to do was to raise the pump price four times during his two-term tenure.
Twenty years after Obasanjo failed to implement complete downstream deregulation, President Bola Tinubu had the courage of his conviction to implement the policy, redirect the economy, and ensure efficiency in the management of public finance.
Despite his foibles and messianic complex, former President Obasanjo is no doubt a remarkable leader. His administration opened the economy and implemented essential reforms that his immediate successor should have continued with. What most critics find offensive about the former president is how he sees himself as the only saviour God created for Nigeria. As far as he is concerned, no other leader before and after him has been good enough. For context and clarity, it is essential to recall the former president’s position on deregulating the downstream oil sector when he was in charge.
In a national broadcast on October 8, 2003, President Obasanjo expressed his frustration and anger at the Nigeria Labour Congress for its opposition to the deregulation of the downstream sector to the point of accusing labour leaders of sedition thus:
“As you are aware, my government has embarked on fundamental reforms designed to depart from the waste and unproductive exercises of the past and leave lasting legacies for the prosperity and improved welfare and well-being of all Nigerians. Since 1999, we have gradually but steadily embarked on the programme of liberalisation and deregulation of the Nigerian economy to promote efficiency and effectiveness of service delivery. Most Nigerians and certainly all organised key stakeholders in the Nigerian economy, including the Nigeria Labour Congress, have endorsed the deregulation programme of government.
“It is a fitting symbol of our administration’s commitment to the welfare of workers and in an effort to cushion the effects of deregulation that the government provided 80 buses to the NLC in 2002. The transliner buses were delivered to the Congress for management without government interference. It is noteworthy that every step taken to deregulate the downstream oil sector has been dogged by, sometimes, irresponsible opposition by the Labour Congress. The result has been that we took too little steps to achieve no meaningful and satisfactory progress. We have tolerated all of these in the interest of promoting popular dialogue and informed dissent.
“Let me inform Nigerians that when government first came up with the deregulation programme, it was endorsed by the NLC and other stakeholders. In fact, the NLC had requested that we call it a “liberalisation” programme. It was thus more a matter of label than of substance. If we had been successful in implementing the deregulation or liberalisation of the downstream oil sector as earlier agreed by all stakeholders, including labour, we would not have been worrying about the periodic and unsatisfactory price-fixing which has led no where except to frustration. The failure to fully deregulate or liberalise has also cost Nigerians billions of naira which are currently wasted on millions of man-hours in queues at the petrol stations.
“The tens of billions of naira currently being lost in money that could have been used to increase capital spending in the universities, fund agriculture, repair and rehabilitate our roads, invest in education and health, improve security with extra police for security of lives and property.
“Realising that the investment of well over $400 million (excluding pipelines and depots) in the last six years mostly on Turn Around Maintenance (TAM) and repairs had not improved the performance of the refineries significantly, government had decided that it was unwise to put additional money into the repair of the Kaduna and Port Harcourt refineries before privatising them.
“What most Nigerians must know is that the contracts for the Turn Around Maintenance for the Kaduna and Port Harcourt refineries were awarded with 50% of the cost paid upfront before the advent of this administration in 1999. Allow me to add that two of the three refinery locations in the country today, were built by my administration as military head of state. This means that if for no other reason, I should be interested in keeping them working. Already, 18 private firms have been licensed to build refineries but they have been reluctant to go into the industry because of Government’s price control in the sector.
“If only 30% of these firms had been able to establish and operate private refineries, thousands of jobs would have been created and Nigeria would have been in a position to even export refined oil products. All these benefits and more have been denied to Nigerians by the stop-go approach to the deregulation or liberalisation programme, and only a few Nigerians are benefiting from the prevailing government-controlled system. In fact, the NLC’s approach has been counter-productive, and inflicted more pains on Nigerian workers. Each time there is a small increase of three naira or more, transporters have used the opportunity to jerk up transportation cost thereby making the ordinary worker poorer.
“A once-and-for-all total deregulation would have meant a once-and-for-all increase in transport cost and the pump price for petroleum products. Without a doubt, a once-and-for-all total deregulation would have resolved the problem of availability and thus bring down prices for those outside Abuja, Lagos, Port Harcourt and their environs who have always paid much more than the official posted price. Pump prices arising from the present total deregulation would, in reality, amount to a reduction in prices of majority of Nigerians.”
Interestingly, excerpts from the 2003 national broadcast by President Obasanjo present a contrast between the former leader and President Tinubu. They also showcase two leadership visions. One leader saw the need to fight for the country’s long-term sustainability but chickened out because he lacked the courage to upset the status quo. Two decades later, another leader saw the damage the failure to make the right economic decision had caused the country. He decided to correct it to avert a looming calamity. While former President Obasanjo left the most challenging task of his presidency undone, President Tinubu tackled head-on what has become an existential threat to our collective well-being from his first day in office. He has remained focused on the bigger picture.
President Tinubu recognises the burden of leadership and responsibility he bears on behalf of Nigerians. In discharging this burden, he knew from day one that he would have to make the right but unpopular decisions that would ultimately serve the best interest of the country and her people.
It is certainly not correct to say this president came to the office without a plan. President Tinubu came into the office with a clear plan titled “Renewed Hope 2023: Action Plan for a Better Nigeria.” It was a well-thought-out programme, with which he canvassed for votes across the country and was elected by our people.
In the past 17 months, he has remained faithful to the document as he implements the distilled eight-point agenda.
At the heart of President Tinubu’s economic revitalisation is gas development and expansion of gas pipeline infrastructure to enable Nigeria to compete with Russia in the European markets. In fairness to him, former President Obasanjo himself recently lamented he did not pay adequate attention to gas during his term of office.
Expanding the pool of available talents and human capital through granting of loans to young Nigerians who are the future of the country to enable them acquire tertiary or vocational education is part of the plans that propelled Tinubu into office. Consumer credit initiative that will promote local production and further stimulate the economy is also high on Tinubu’s action plan. To the President’s credit, these two important policy initiatives among several others are being implemented through NELFUND and Nigerian Consumer Credit Corporation (CrediCorp).
If there is one President of Nigeria that came prepared and well armed with a clear cut plan to reposition the country across sectors for better outcomes, that President, undoubtedly, is President Bola Ahmed Tinubu.
-Ajayi is Senior Special Assistant to President Tinubu on Media and Publicity
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Opinion/Feature

UNCOMMON SCHOLAR, EXCEPTIONAL ADMINISTRATOR: MY TRIBUTE TO PROF. OLOYEDE AT 70

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By President Bola Tinubu

As Professor Ishaq Oloyede turns 70 tomorrow, October 10, I pay a special tribute to this astute administrator, educator, author, and scholar, currently the Joint Admissions and Matriculation Board (JAMB) Registrar.

As the former Vice Chancellor of the University of Ilorin, Prof. Oloyede’s invaluable contributions to the nation through academia and public-sector administration have significantly impacted the academic community.

ALSO READ: Tinubu Congratulates Zainab Shinkafi-Bagudu On Her Election As President, UICC

His impactful tenure at the University of Ilorin, during which he introduced landmark ideas and innovations that helped the institution attain enviable heights, is on record.

Through patriotic dedication and commitment to his craft, Prof Oloyede imparted knowledge and character to thousands of students who underwent his teaching during his glorious and impactful academic career.

Indeed, the bedrock of development lies in education. Developing nations, including Nigeria, are in dire need of more scholars like Prof. Oloyede. His selfless sacrifices and innovative approaches to learning and leadership give hope for a brighter future.

Perhaps more remarkable is Prof. Oloyede’s transformative leadership at JAMB. He pioneered and sustained a series of reforms and technological innovations that have made the admission process in Nigeria transparent and credible.

In his eight years of stewardship at the board, thus far, Prof. Oloyede has demonstrated an uncommon commitment to financial integrity and accountability in public service. He has also raised the bar in administration and management.

I am proud of Prof. Oloyede’s accomplishments.

The nation owes the Professor of Islamic Jurisprudence a debt of gratitude for transforming JAMB, traditionally a non-revenue-generating government agency, into a consistent contributor to the national treasury through efficient financial management. His contributions to JAMB are invaluable and greatly appreciated.

On this occasion of his 70th birthday, I join members of the academic community, students, JAMB staff, and well-wishers in celebrating this scholar who, in words and deeds, has also done a lot to propagate the Islamic religion.

I pray that Almighty Allah will continue to honour the distinguished professor with health, wisdom and strength to serve the nation for many more years.

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Opinion/Feature

Clarification On NNPCL Refinery Operations

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By Sen. Heineken Lokpobiri PhD

My attention has been drawn to statements made by Engr. Kamoru Busari, Director of Upstream in the Ministry of Petroleum Resources, who represented me at a recent conference in Lagos. I wish to categorically state that the claim that I directed the Nigerian National Petroleum Company Limited (NNPCL) to stop running its own refineries and focus solely on equity participation in other refineries is false. This does not represent my position as Minister overseeing the oil sector, nor does it reflect the stance of the Federal Government.

It is important to clarify that NNPCL is a company governed under the Companies and Allied Matters Act (CAMA), with a functional board and management. The Ministry of Petroleum Resources does not control or run NNPCL, as it operates independently like any corporate entity.

ALSO READ: NNPC/Seplat JV’s “Eye Can See” Programme Restores Vision, Hope In Imo

The oil and gas sector is fully deregulated, and the Nigerian government remains committed to promoting in-country refining. We encourage companies, including NNPCL, to operate independently, following global best practices. While we provide strategic guidance, we do not interfere directly in the operations of these companies.

I reaffirm our commitment to supporting the growth and independence of NNPCL, ensuring that its operations are in line with international standards for efficiency and transparency and profitability.

Sen. Heineken Lokpobiri PhD, Minister of State Petroleum Resources (Oil), wrote from Abuja, Nigeria

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